all right. we're back. hello, welcome to "worldwide exchange." i'm ross westgate. and i'm kelly evans. these are your headlines from around the world. >> heavy metal profits brings the first u.s. company out of the gate with earnings season. but results will continue to be pressured by weak demand. >> samsung electronics operates a fifth straight quarter, but sales flip. and government is on track for the austerity measures as angela merkel gives up -- for election. and aig just finished off paying off its massive bailout, but the company is now weighing on whether to sue the u.s. government over that very rescue.

>> now 2013. >> it's been so long. how long has it been? >> months. >> better make the most of it, though. >> two days. >> yeah. two days. >> then it's onward. >> anyway, look, we're here. i still don't know what time zone and country i'm in. >> there was snow, right? >> there was. it was beautiful. >> on today's show, we hone in on samsung in seoul. i'm all frufterred because you're back. the electronic giant will expand its lead over apple this year. >> and we've got our chips in. and we'll head out to las vegas for the latest on the consumer

electronics show. >> the trade deficit widens to its largest level in five years. >> and we'll get the latest from wall street on just how happy a new year bankers are likely to have. >> i hope it's not that happy. some will be okay. generally speaking. now, the greek prime minister anthony samaras is in germany to discuss angela merkel. joining us today, james sokin. how are you? >> good morning. very well. thanks. >> nice to see you. >> and we should kick off our discussions. we were going to ask you about what's happening across europe. now we have samaras and the greek prime minister saying we are looking at optimism. and athens is delivering.

>> i think it was one of the famous old americans who said that givers have to say when enough is enough because takers rarely do. so if the greeks say they're full of optimism for the coming year, it's probably sending a cold chill down the spine of the average germans. >> yeah. because it means they expect additional help going forward. >> they've worked out how to keep milking the cow. >> we started this year with a lot of tailwind from last year. china hasn't had a hard landing and greece didn't get kicked out of the eurozone. if it keeps going, then why is anything going to change on that? >> look at all those negatives or negatives that didn't happen. america didn't boil over the fiscal cliff. what does that mean? what that means is that america, which is now nearly robust now

is able to stand on its own feet with tax cuts and overextended spending plans decided not to necessarily do that. but actually, that would be the best sign of intermediate health that you could have. so we have this weirdly twisted view of the world at the moment where really in the long-term is good, it's considered in the short-term bad and, therefore, markets are -- >> how about regulation? >> very much so. funny you should mention that. mervyn king calls this a paradox. and exactly what has happened is them coming out and saying they will give much more time is exactly what mervyn king said they should do. but you know why he said that? he said that because that's not really the issue. and they're on the balance sheet. everyone in the market is responding always to the first derivative of innocence. not really to the second or third.

>> they're still bust, they still can't pay their without and they can't without major debt forgiveness. >> when a prime minister comes up to you and says he's full of confidence for the new year, he's saying he needs help and he's optimistic. >> on that note, james will stay with us. we want to get some news out of spain, too. that country is set to start its new year with bond auctions. this year, the government must raise more than $2 million billion euros in debt. the treasury's funding this year is being outlined in madrid as we speak. as we get details on that, we'll absolutely bring them to you. we're talking about nations showing up and saying, give us the help. but spain hasn't even had to go that far. >> the spanish base can get some of on their money if they declare official emergencies. what they're trying to do is to avoid saying we really need the

help, we're in trouble. all these countries, as the situation continues, it's clear they won't appear to be the only ones to call the situation off. and the spanish are aware of the fact that everyone else is aware of. we can deal with these countries. spain itself is a significantly different issue. this is a european problem, a potentially fatal one, but one that the spanish isn't really up to. >> can we still get beyond the german elections before there is any activation of the omc? >> we're talking about -- >> or can we go everywhere? >> the issue with the omt, if you're a central banker's performance, it's all these

acronyms and different names. it's worth bearing in mind that the really important thing that you do if you're printing money, as a central bank, is qe. and by that, i even mean anglo sackson qe. that is the purchase of long dated bonds. and that's what the ecb is not allowed to do. so they talk a lot about what they're doing in terms of ltro and omt and the others. but theirs are still normal convingzal transactions. what they're going for with the german sess getting permission to have normal bank antibiotics and that's what we call money printing. we think we've gone to that for september because it's basically you need to somehow convince the germans or have a long time to explain it. especially during elections. james is with us. any questions for him or for any of us here, shoot them into

worldwide@cnbc.com. let's bring you up to speed where where we stand on european markets. pretty even steven, actually. we are up at the session highs. it's actually pretty flat. the ftse 100 yesterday down from 25 points. still above the 6,000 level. up 8 points this morning. great sales numbers today from debanon. all having a pretty good christmas as a stand out so far. xetra dax down 12 points, ibex down 7. the cac 40 gain up 5 and the ftse 1100 gains 8. treasury yields, still around that 11.91%. that was that eight-month high that we hit later monday. still tracking around there. italian yield, 4.3%. spanish yields still below 5, 5

a.089%. currency markets, a lot of focus on euro/yen today. 114.66 is where we stand. the japanese finance minister saying the japanese government will buy bonds from the european stability mechanism. they had only done it previously from the esfs, which is a permanent bailout fund. dollar/yen, 87.38. profit taking still after hitting that 29-month high of 88 of 48. euro/dollar at 1.3124. friday we were just below the 1.30 level. that's where we stand right now in europe. let's bring you up to speed with the asian trading session. will i sixuan joins us for the first time today in singapore. >> thank you, ross. a weak handover from wall street. the nikkei came off its peak ending nearly 1% lower despite japan's new prime minister stepping up the call for aid yet again.

exporters extended losses, but sharp shares jumped after the struggling tvmaker said better than operating profits for the last quarter of 2012. in china, the shanghai composite slipped more than .4%. the shanghai fell .4%. raising doubts over that 9.4 billion deal. china pacific insurance sharply lower after the u.s. callout a reported stake in the country. in taiwan, suppliers wait on the markets with the taiex ending lower by .4%. the kospi was lower. bellwether samsung electronics slipped by 1.3% despite its earnings guidance indicating yet another record quarter. meanwhile, australian shares

fell the most in five weeks dragged down by miners, banks and industrials. back to you, ross. >> thank you. now, speaking of samsung, the company may not need any excuses to explain its solid earnings, but several companies are expected to dip up scape goats this month when they report earnings. superstorm sandy is expected to top the excuses. and there may not be a lot of love to go around in washington around valentine's day this year. if lawmakers fail to come together on debt talks. according to fresh numbers, the u.s. could hit the debt ceiling by early as mid february. john harwood explains all the details, a couple of reasons to go and visit that website this morning. cnbc.com. still to come, why property is up at samsung electronics, but the share price is down. see you in a moment.

welcome back.

alcoa gets the earnings reports started today. slower growth in the economy, the eu debt crisis and superstorm sandy are expected to top issues. take a look at shares this morning. before the report, they're down .75% in frankfurt. so trailing the 34k9. they have been roughly flat over the last few months. james is a huge fan of werings season. you're so excited about this one, i know. >> i live for the wering hes season. you could spend almost your entire time -- >> there's only about three months of the year when you're not engaged in looking at earnings. >> ask you're probably on holiday. >> and are we too focused on werings season? >> samsung, earnings results up, share price down. if you think earnings is

relative for share price performance, it isn't. we're talking about the reporting season rather than the underlying earnings. >> they have quite a lot of leeway. they've given guidance to the analysts about what those earnings might look like in the near term. all the analysts are pawing at the results. all in all, a huge amount of activity and brain power wasted on something which in the near term has been well flagged, isn't that important. >> at the same time, though, there are analysts who -- and we've seen this. who will get the set of numberes and will go, relative to what i expected, they said x about same-store sales and y about aluminum pricing and there is information they're getting out of these results and out of the conference calls, too. >> absolutely. it's what's behind the headline results that's informational and instructive. and that's what the analysts will be taking out of it. before they can get into that, they have to flesh out with their notes and tell clients

overnight, we are forecasting this, we were .1 out or whatever. >> i wonder, is there an expectation you have about how earnings might go? forget the seasoned part identity. we're looking at the end of the year in the u.s. how important is it that these earnings look okay? >> well, one thing is very interesting. obviously, the stock market has done very well in the u.s. we know that profit margin res very high. we've got this long-term risk that margins meet them in revert. however, in the near term, something quite interesting is happening, which is that although demand is fairly lackluster, we know that wage cuts are being held back. commodities, they have a very high impact at the moment in terms of which way we go over the in the next quarter. and, of course, demand does mean those are under pressure. even at a very high level for profit margins in the u.s., we have them to nudge even higher.

>> extraordinary. >> yeah. >> more to come from you, james. we'll looking at samsung reporting earnings. but investors essentially appear all that interest. sherry has more details from seol. what's the reaction? >> the reaction was pretty bad, actually. the stock market, though, its shares were down, off by more than 1% today. but this is not a surprise, ross, given its track record. for the past 12 quarters, three years, that is, the stock has underperformed the index with five straight sessions out of each guidance. as for its werings, strong sales led to a slash of models and that's pleased to be the main driver of these strong numbers. the company bombarded the market last year with close to 40

variants of smart products when am was out with just a single model of iphone 5. now, fourth quarter sales came in at $56 trillion one and operating profit at 8.8 trillion, which is roughly about $8.38 billion, up 83% on year. so this is the fifth straight record quarterly operating profit. now, another factor here is a pick up in demand for chips, especially for advanced chips like nans and mobile ap, which are expected to a play a bigger role in samsung profit going forward. now, the company said today at the consumer electric iics show in las vegas that it's on track to be the world's top home appliancemaker by 2015. the las this month, january 25th. guys.

>> all right. chery, thank you. let's bring in andrew milroy, from itt pacific in singapore. we'll keep chery in seoul, as well. andrew, the reaction to the news there from investors, where samsung is clearly beating apple, though, which is interesting is in the smartphone segment. do you think that's going to continue? they're taking a lot of share of on smartphones. is that going to continue? >> yeah, i mean, i think the strategy has been very successful against apple and i think chery made one of the key points. last year, samsung launched nearly 40 new products and is apple launched just one. so they've got a strategy to offer smartphones to a huge variety of market segments. they've got a strategy to produce a variety of different form factores and they're leading this new market for the so-called fablets, devices that are too small to be a tablet,

too big to be a smartphone. they've been very innovative in their approach to targeting a variety of different segments whereas apple hasn't had as much differ enation in their products, as well. this has been very successful. >> does that mean that they can take share away from apple in the tablet and they're creating a new sort of market that will take products away from apple even in the tablet stage? >> yeah. i think that's why we're going to see a lot of the action in 2013. so i think, you know, they really do now dominate the smartphone market and there's no doubt about that, at least on a global basis. i think next year -- i mean, apple is still dominant in the tablet space. i think next year we'll see samsung and others turn their attention to a much greater extent to the tablet market on the so-called fablet market. the hybrid smartphone/tablet market.

>> i love it. we have a new phrase, fablet. do you like that? >> i don't like that. it's so cheesy. >> how do you spell that, andrew? >> is that with an "f" or a ph. [ >> yeah, it's phablet, cross between tablet and phone. >> oh, i see. it sounds like a fabulous tablet or something. chery. >> yes. there are some who are concerned, though, that samsung is growing too dependent on its mobile business. that accounts for 70% of samsung's operating profit. what are your take on those concerns? >> yeah. i think there is a concern that the market that they've generated so much of their own in growth is actually maturing. so the smartphone market as we know it today is pretty mature in most advanced profits. i think obviously investors are

concerned about the impact that will have in samsung's profitability overall. but as we mentioned, i think we can expect to see them move into adjacent markets in the tablet market and this other new market that's recently been transcribed as the phablet market. >> talk about where they're going to. how important is china? that's been one area apple has come under criticism for not getting it right. how important is china going forward? >> i think a lot of other hand setmakers are obviously strong in china. i think there are a lot more players. i think some of the more advanced markets are dominated right now by samsung and apple. there other players that we can't ignore like blackberry and hltgc. in china, we're seeing some of the local players like vt becoming strong there. but i think the whole android approach is potentially more successful in china on the grounds that there is much more scope for localization. it's much more flexible than the

apple ecosystem in many ways. you know, some people say that the apple ecosystem is more secure and reliable and a lot of enterprises are more comfortable with that than the android one. but the android one offers the flexibility that is needed in localizations where something is needed in the market. it will offer competition for some of the local chinesemakers than in some of the other facets. >> just on a side note wrb where does that leave microsoft? >> that's a very good question to ask, indeed. obviously, you know, microsoft have come out with windows 8el. a number of manufactures are pushing windows 8el devices aggressively at the moment. we expect to see them take some share and provide samsung and apple with some competition. because i guess the strategy

they have is for the common user experience across multiple devices. so pcs, tablets, and smartphones and other devices all running this common operating system. and we think they may have some success with ernter prices who find out a more secure and reliable and easy to manage approach, especially with the growth of people bringing their own devices into the workplace. so we think they will provide some competition in 2013. >> andrew, good to see you. thanks for that. schery, good to see you, as well, from seoul. now, the associated press sent out its first sponsor tweet promoting samsung at the consumer electronics show and in effect turning its twitter page into a source of advertising revenue. the ap isn't the first news organization to get paid for a tweet. slate has sent out sponsored tweets and celebrities have made money off sponsored tweets from

their own accounts. some of the ap's followers aren't bothered by the news. >> is that live? can we click on the -- >> i don't think. >> click on that one. click on that. why don't i take you through it to the samsung page, theoretically. >> right. the link on ap. >> there we go. so that's what it takes you to. so we're now doing samsung's advertising for them. that's an interesting -- you click on that and you go to the samsung ces page. it's relevant to what the tweet is about. >> well, of course. from samsung's point of view, this makes a lot of sense. 1.5 million twitter followers.

>> when people click through and they go to that, are samsung paying on a click through basis to ap? >> perhaps. but the more important question in all this is this something the ap should be doing? does it risk confusing its followers? and interestingly, what does twitter think about all this because twitter is trying to get the tweeter to commoditize its own service. so if you're effectively cutting the middleman out to get a sponsor tweet in the corner there, they're paying ap for it. >> they set a communications system up. it's like saying i make a -- you know, on my mobile phone. >> but remember -- >> sorry, guys, you put a communications system out. why should vodafone cut a cut? >> not that there's some duty or obligation here, but from a business point of view, twitter needs revenue somehow. this is country that the company is rumored to be a big ipo at

some point. a big part of that will be whether it can monetize. if the ap comes in and says we'll take that sponsored tweet, i wonder what that means. >> a lot of people will make money off of twitter, not necessarily twit perpendicular. >> exactly. >> in any case, we want to know what you think about this. e-mail us, worldwide@cnbc.com or tweet us, @cnbcwex. >> my view on that is yes, actually, as long as it's -- if it's about -- if you align it with what the tweet is about. they've done it saying, look, i'm tweeting that to you. we've been paid. here is a link to the samsung cs page. >> as long as it says that big capital letter sponsored tweet, i'm okay with that. it's when it's not as clear, james, that i worry about.

>> we have adverts in newspapers? yes, we do. if we have a story in a magazine that masquerades as a story but is actually an advertisement, then it has to be installed. and if you have the journalist directed by these link webs people pretty soon spot that. >> let's hope. good point. >> back to the internet, google executive chairman eric smith has arrived in north korea. plandy drury explained what the head of one of the world's biggest internet companies is doing in one of the most isolated places on earth. >> eric schmidt of google is now one of the highest executives to visit north korea since kim junk

union took over the country more than a year ago. but this time richardson says they're there on a private and humanitarian trip. basically, they're looking to see if the country's economic, political and social media landscape first hand just to see what it's like and also to discuss the status of a south korean important u.s. citizen who has been detained for some time. this is what richardson had to say upon landing earlier today. >> we're going to meet officials from the north korean government. business leaders. we're going to ask about the american that's being detaped. >> so what's the problem? this four-day visit comes after a launch about the controversial launch by north korea. firing -- into space using a long range rocket. u.s. officials have called the

trip and the timing ill advised. a government official issued this comment. frankly, we don't think the timing of this is particularly helpful, but they are private citizens and they are making their own decisions, end quote. as you see, quite strongly worded. going the currently has office necessary china, russia and south korea. all three of the country's neighborses. but no presence, obviously, in north korea. back over to you. >> all right. stick around. still ahead on the program, the number of workers in the city of london is slump to go an eight-year low, according to a new report. will the trend of layoffes and financial services continue? >> we'll talk about that when we come back.

and these rts headlines from around the world. heavy metal profits, alcoa the first major u.s. company out of the gate for earnings season. but results may continue to be weak from weak demand. and samsung soared on solid smartphone sales, but shares are

down. angela merkel goes up for a key regional election. and suing uncle sam, aig just finished paying off its massive bailout, but the company is now weighing whether to join a lawsuit against the u.s. government. right. european stocks just down a little bit at the close yesterday. china goes up a little bit today, the ftse 100 up .1%. the xetra dax was flat. cac 40 up .3% and the ibex was flat. >> the city of london is continue to go slishg. a number of city workers in the uk capital has fallen to an eight-year low. now the financial authorities database show people employed in front line jobs at banks have fallen by nearly 20,000 since the financial crisis in 2007. the number of approved staff working in the financial services industry is just under 152,000. one of them is ali orogh.

jim ferguson is still with us. ali, is it quieter around your office these days? >> no, not at all. not since yesterday, of course. but i'd like to see the number of how many people are employed working around the new regulation that's we all have to abide by. not just for the first of january, but going forward over the next few years. >> and how many of the city jobs are actually jobs regulating city? >> i think in the report that you mentioned that, you know, they expect jobs and production, numbers in general to speak who are regulated. but obviously, there are many ancillary businesses outside of actual banks which all contribute to working towards or wading through these new rules. >> now, speaking of the new rules, we just learned the rules regarding basel 3 won't necessarily be implemented or as strengthly as banks were hearing. what's your take on the latest

that we're hearing and generally speaking on the regulations going down the pipe this year? >> i think the most important thing about regulations is we will get the regulations. i think that was the tag line for these discussions when basel 3 was thought about in 2009, which is that they will be phased in as and when is approach in order not to dampen economic activity. the liquidity ratios that you mentioned, no pup intended over the weekend, were always too tough, i think. not just because from a lobbying point of view, but because since they were initially in visits, you know, for example, government bonds being the most liquid assets and the most rich, that turned out not quite to be true with the eurozone crisis. and so i think some of the things that come to light of a more realistic way of applying those regulations, but also, you know, they're twiet stringent, a

one size fits all regulation, which isn't very helpful. we're still going through this five years on. >> and you talk about one of the things that will be impacted by the delay of basel 3 the. just explain this. why is it not important? >> well, the important thing is that on the 1st of january, basel 3 or the legal implementation in europe was supposed to be implemented. it was supposed to be in law. and on that date, regulators are going to take a snapshot of all banks' capital and from that grabbed father it down. and anything issued up and to that date it was understood would be eligible to be grandfathered. but it hadn't been rat tied yet.

and we don't know whether regulations have taken the first of the snapshot. >> and so there's more clarity, we're likely to be stuck in this limbo. >> absolutely. i believe there's a meeting in the week beginning the 15th of january. possibly it might have rat tied by february. but i think most people are shooting for june or july of this year. >> you can't deny that banks have rerated, not just in the u.s., but around the world. we've seen a rally, one of the best performing sectors of 2012. even despite all this uncertainty, there are reasons why investors think banks have more protbility now than a year ago. >> banks definitely have a profitability outlook. there's no issue about profitability. not much of an issue about profitability. and most of the markets perceive that the issues the banks are dealing with are funding and regulatory space. if the regulators keep turning soft, which they have a history

of consistently doing, and the funding situation is now benign because the banks are -- in the private sector, then are fully back stopped by the central banks, then we don't have a problem. but i think the fiscal cliff is up. the market is interpreting news in a overtly positive way, but may not be that positive. why are the banks back stopped by the private banks. you know, why are the regulators coming in and saying you need more capital? because the banks have to set up a lot of money and why are the regulators now saying we'll geoff you more time? because they're not ready. the thing that has not been mentioned here, the thing that may want be mentioned is main, clearly. but the banks are being driven more fundamentally, this has been going on for five years and will continue into the future is what we're really talking about is balance sheets. it's about the hidden stuff on

the balance sheet and whether that's fully processed, partially processed or what have you. >> and has it? >> certainly we've gone a long way through deleveraging. in certain bank cases, that's true. there was a case with banks in the uk given specifics for ing and the netherlands, given specific targets and deadlines for what they have to do regarding leveraging. but in general, going back to the initial point about job losses in the city, it's a much slower, longer trend. it's rare that we get the big headlines such as we had out of ubs with 10,000 layoffs over the next few years, etcetera. it's rare that we get that. these things are slowly happening behind the scenes. >> all right. thank you for joining us. ubs now, banking chief andre olson, former executive, they're

expected to be asked about samsung culture after the record 1.5 billion fine ubs faced last month for involvement in the libor rate rigging scandal. shares of pingan insurance dropped sharply in hong kong today. the state run china development bank has expressed concerns about the tightened conglomerate cp group to expire the stake in shares. that chinese bank is rethinking its decision to back the $9.4 million deal. aig meets tomorrow to discuss whether to sue the u.s. government over its bailout which it just finished paying off. aig may join a $25 billion suit filed by former ceo hank greenberg. it argues the nature of the bailout in which the u.s. took a 92% stake in the company and made aig's wall street clients whole deprived shareholders of billions of dollars and violated

the fifth amendment which bans a seizure of private property without just compensation. >> and yumm brands is warning about sales in china. china's sales fell 6%. the company found its full year earnings forecast was below stems. yum's restaurants in china generate 50% of its revenue. yum stock was down after hours in new york. >> that's a big move. >> yeah. and one city council is considering naming its airport after, get this, ozzy osbourne. it's being put forward by jim simpson. simpson says the move would

boost tourism in england's second biggest city. it's saying it's distinctly unxwlesive, provincial and there's no comparison. airport wars, regional airport wars are under way. ozzy osbourne international. >> they should just go a long way. >> i like it. would the code be ooi? >> it doesn't mean that you would be more inclined to fly to berlin. what do you think the airport's would be, young like that? >> terrible. >> you're not going to bat that one back? >> no. stephane pedrazzi is following the latest for us out of france. >> they're all trying to find a solution to help peugeot regain market shares, but would a full

merger be the right answer? not really sure. it needs some support for its international expansion. it doesn't need to buy another carmaker in europe where the company is facing already tough competition and where it has already some capital. perhaps it's not the right answer. second problem and probably the main one where peugeot could find the money to buy opel even if the fresh carmaker would sell, it could raise around $1 billion euros and the third question mark after this report, will opel be the right answer for a difficult situation? but when you put together some problems, you have bigger problems. you don't necessarily have the solution. nevertheless, the french government believes that a full takeover of the german carmaker would be the right answer to the current situation. it would be better than the carmakers up. they have announced just before

christmas that they're going to give lots of three available. it's what the spokesman for the carmaker told the french news wire. >> so good to see you this morning. more details out of japan today on the government's new emergency stimulus plan. what are the details telling you? >> hi, kelly. the japanese government's revitalization team held its first meeting today and drafted its obviously of its emergency schedule plan. it will focus on beating deinflation through stronger cooperation between the government and the bank of japan. the draft included the size of the actual stimulus package, but the package could be as large as $228 billion. the prime minister has ordered that the measures be set out by

friday. in the meantime, the finance minister said that the government wants to have a written agreement with the boj on policy goals mainly focusing on the price stability target. the government wants the central bank to adopt a 2% inflation goal. aso says the government will use its foreign reverses to buy bonds to help weaken the yen. he said that the purchase starts today, but the amount is undecided. back to you, kelly. >> thank you very much for that. let's take a quick look at the agenda in asia tomorrow. it's a busy day. we'll get retail sales figures for australia. and staying with retail, japan's chain store lawson will look to match earnings of seven and pi. the bank of thailand is expected to hold rates at 2.75% when it meets to decide policy. and still to come on the show, will china's economic

recovery continue? big exporters like australia sure hope so. >> we'll take a look. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.

australia's trade deficit rose since january 8th. joining us for more is andrew dale, head of resources research for asia mcquarry securities. an rue, thanks for joining us. we vnts had the hard landing that some feared in china. have we now found the bottom for base metal prices? >> look, i think that, you know, probably the bottom we saw towards the back end of next year. now it's more a question of fining the real sort of growth in the china economy. what we're really seeing is a pretty substantial stocking.

iron ore has accelerated from its lows of 80/90. but a big chunk of that is a restocking going on at the mills. we need to see that sort of unwind to some stoent and focus on what real demand is in the economy before we can get really excited. so maybe at the moment a big inflex point. we still have time to wait and see what goes on in the economy. >> it's interesting, you say we're going to wait for next year. what happens? the relationship between sort of production right now, production quotas and prices because it's been a lot of the miners wonder wlg they need to pull back on how much they're digging out of the ground. >> yeah. look, the situation at the moment is that china is producing at a pretty reasonable rate when it comes to steal tonnage. demand is relatively good. but what really has happened is the mills themselves ran down their inventories of coal and iron ore. so the real driver in some of

those commodity prices. and this is pretty consistent with a lot of chinese economy. inventory levels are relatively low. particularly at end users. as we go into this year, and we're going into china's new year, don't forget it is a seasonally weak quarter. however, you see a bit of restocking into that holiday period and it does cause a bit of an acceleration in prices. that's what we're seeing now. what we really need to focus on is the post chinese situation. can real demand come back? not just the seasonal uplift that we see for the second quarter, because that will be what's critical in order to sustain commodity prices or commodity prices staying where they currently are. >> andrew, here you like, if i get this right, iron ore, steel and cement, nod fond of thermal coal and aluminum. but aluminum in particular, they're expected to look a little better. but it sounds like they could have some headwind necessary 2013.

>> yeah, look, aluminum is one of those commodities that has a move in pricing. it's going to ton to be a structurally challenging smkt for quite a while. thermal coal market continues to struggle because inventories on the ground have been higher. however, we have seen a little improvement in demand in china. so those inventory hes days are coming down. we're not favorable on things such as the copper market and the iron ore market and the copper and core market, thinking all three of those have better inventory situations. as i pointed out earlier, you need to start seeing things improve on the end demand for those pricing scenarios to be sustainable. >> and there's so many concerns about capacity, particularly in the aluminum industry. andrew, just to sort of tie this

up, when we start to look into china, into that sector and we get around the chinese new year, i always wonder, we see such an increase in all commodity prices and going into that after. can you just play it that way? expect the run up into that event and expect a sell off? >> yeah. look, i think one of the key things to focus on right now for investors is that serchbtment towards china has certainly improved. i traveled through china in december seeing many companies there last week also seeing people. and there's no doubt that there's a positive sentiment in the market now. now what you need to focus on here is that you also have a seasonal uplift into the second quarter. so it's dangerous to try and be bearish on the chinese economy under those sort of circumstances. i think that equities continue to have a relatively good run into the middle of this year and the bigger questions start to come into the back half of the year. sometimes you have to chase some of this momentum because that's what this market can do to you. >> it sounds like a motive yagz

speech. andrew, thanks very much. angelo americans sticking with this sector has named its new boss. they will replace cynthia carroll. cutifani, currently in charge of lang low gold will be tasked with flagging the miner. james ferguson, final thought before we let you go here? what themes do you like for 2013? anything to do with the chinese new year? >> i really like the fact that the year has started very much with the sort of on things that we were looking for further out of the year. we're seeing weakness in the angelo sackson bond market. the government bond market. i believe it's because qe3 in america is the requirement and we've been doing it too aggressive in the uk. so that means that we've got an enthusiastic start to the year for risk assets. as expected, i think china will not only have the seasonal uptick in the second quarter,

but the new leadership will be looking to do what they can to start the economy. china's problems really start 2014 on wards because they can't make this transition from the infrastructure model to the consumption model without a significant drop in growth. so maybe all the change will happen this year in the middle of the year. >> you should. >> go home after this month. james ferguson, sounding partner at national shares partner. the second hour of "worldwide exchange" continues in just a moment.

poib to "worldwide exchange." i'm kelly evans. >> and i'm rging. >> alcoa is the first major u.s. company out of the gate with earnings season. results may continue to be pressured by weak demand for aluminum. samsung's solid smartphone sales, but sales have slipped. germany's angela merkel is paid a visit by perhaps's prime minister. and aig considering suing the u.s. government because of the rescue.

>> right. the good news is, we're back together. we'll talk about that because we start off this hour with some data. the economic sentiment survey for data retail sales for november retail sales, let me kick off with that one. first of all, for the eurozone, up .1% for the month. weaker than the forecast on the annual rate down 2.6%. they were forecast down 2.7%. and the october retail sales were revised 277%. that's since october revised up, the monthly november retail sales weaker than expected. >> and here is what's interesting. even as unemployment has hit a fresh record, at least in the eurozone history, some improvement in business confidence at least in december. so first to bring you those figures, economic sentiment, as you can see in december, hit the highest since july. a good sign there's a but, though that but being the retail

les disappointed. there's a chance they could have turned around in december. but the message here, 11.8% is the november jobless rate pb that's up .1% from october. it is the highest since the eurozone record began. youth jop jobless rate and record high 1.24. that said, it doesn't pate a pretty picture of what's happening across the eurozone. although, if there's any reason why the euro/dollar isn't hit harder with this news, it may have to do with the fact that business sentiment didn't rebound some in december. >> but unemployment, that rate hit a record high and households in the retail sales refuse to go spend. bob mckee joins us for the first time this year. bob, your reaction to that smashing of data? >> a little bit of noise there after an october down the following month. some business sentiment not so good. how are you supposed to read that?

i think you read that that the eurozone is still in a pretty poor state. it may be bottoming out from a drop taken over the last 12, 18 months. generally, you would have to say the eurozone has been pretty depressed with just a glimmer of a sign that maybe it's not going to get any worse. >> is 2013 a turn around year. >> i see it as possibly a lack of a part of the year, a bit of a turn around in europe. we're jenning to see the end -- >> driven by what? >> driven by the end of the inventory cycle, driven by the fact that there's better growth in asia and the rest of the world. so even merging economics are finding demand and the u.s. will relatively be growing better than the rest of europe. so you put those things together, there's the possibility that manufacturing can improve from the levels

we've seen. that will benefit the core of europe. countries like uk won't benefit because they're not manufacturing companies. >> and what is on the agenda today stateside? earnings, alcoa, monsanto and wd-40, helping to grease the wheels of the economy. that's what's on the agenda. trying to bring you up to speed where with we stand for the futures. >> let's take a quick look at what we're seeing this morning as we check in with our global markets report. the dow jones industrial average starting with u.s. futures looking to shed about 20 points at the open. the fass dak and s&p 500 are also pointed lower. just above 13,000 on the dow. it has been a quieter season as we await earnings. we'll get some clarity on that

when alcoa reports later. now, the cnbc ftse global 300 is just down a hair. take a quick check on european bourses. it's a mixed picture here. for the most part, we're seeing gains. but, again, that has more to do with the ftse being up fractionally with the cac contributing a third and with the ibex 35 up .1%. the sweat ya dax continues to underperform. >> and we will be keeping our eyes on bond yields. today, the yield is located around 1.5%. spanish yield below 5.1%. we check in with the u.s. yield, it has come down this morning. back below 1.9%. on the currency markets, euro/er yen has been of interest today. the japanese finance minister came out and suggested the government will buy bonds from the european stability mechanism. the permanent bailout fund. that helps gives the euro a bit

of a lift at 1.40.65. dollar/yep, more profit taking after hitting that 29-month high on friday. euro/dollar, we dipped below 1.30. 1.3116 is where we stand at the moment. that's why we are in european trade. rejoining us with a look at the asian trade, li sixuan in singapore. >> thank you, ross. most asian markets finished in the red following a week gain on wall street. the nikkei ending nearly 11% lower. this despite the new prime minister stepping up his call for easing yet again. exporters extended losses. sharp shares jumped after the tvmaker forecasted better than expected operating profits for the december quarter. in china, the shanghai composite slipped by .4%. property counters were the big loserses. and the hang seng shed almost 1%

today. ping an shares fell more than 4% after news that the china development bank is reconsidering the sale of shares in ping an shares. china pacific insurance sharply lover after u.s. carlyle group sold its remaining stake in the company. in taiwan, htc lost ground. apple suppliers weighed on the markets with the taex lending lower by .4%. technology shares dragged the kospi lower. bellwether samsung electronics slipped 1.3% despite its earnings guidance indicateling yet another strong quarter. meanwhile, australian shares fell the most in five weeks. back to you. >> all right. thanks for that, sixuan. alcoa gets the u.s. earnings party season started. the earnings season party

started when it reports after the close today the. the aluminum giant is spec'd to have revenues of about $5.6 billion. as in past quarter, the sluggish global economy, slower growth in china and the eu debt crisis brought down demand. shares ahead report are down by .2%. bob mckee joins us now this hour. let's start with u.s. earnings season. how important and what might we see? >> i think it's very important because global profits has been the big winner in the past couple of years in the u.s. but what we haven't seen is the corresponding rise in business investment to drive the economy forward in terms of employment and change things around. we continue with a growth rate in the uk and the u.s. above 2%. it's much less in europe. so the cooperations, are they going to continue to grow profits? we've seen slowdown necessary each quarter.

the last quarter werings for the s&p -- >> bob, the question is whether they reinvest. >> indeed. >> and they could support surprises by just generating more buybacks. >> we've seen buybacks, we've seen cash hoarding. what we haven't seen is investment in the real sector and replenishing those business equipment and factories that were required, but particularly for those seeing a slowdown in emerging areas like alcoa, which is more difficult. they're in a market which has been very depressed. i think we look at other sectors, we'll have a better picture. financials have done better, but it's the key manufacturing sectors and their profits and earnings and what they're doing about investments. >> just before we peck up on that, we want to bring a little bit of news. waiting on spain to tell us what it expects. now the treasury is reporting that its growth bond issuance target is $97 billion euros. it says it plans one syndicated

bond issue and that it sees net financing needs of 71 billion euros in 2013. any thoughts on that? >> which country? the spanish -- >> spanish, of course, 97 to 71. i think that's more or less what we expected. it tells you that the spanish government at least is arguing that it's going to keep to the targets that it's agreed with the european leaders in terms of the budget deficit and it has that rollover effect. it's continue to go rise for spain, which is a problem it's got. and we'll see. if it gets -- it's built up quite a buffer to cover financing in 2012. it will attempt to do the same while if markets are willing to let it by trying to trump in a lot of that financing so that down the road if things get worse, it's able to cover it. whether they can do that, we'll see. >> i think they're looking at 5 billion in 2013s and -- >> i think it's quite a lot to

begin with. that's the program. >> take advantage of the current climate. staying in spain, spain's prime minister is in germany today meeting with angela merkel. bob, one of the tail risk that's dissipated last year was any thought that greece would be kicked out of the eurozone. germany finally decided we can't afford to kick them out so we'll just keep paying them. is there anything that's going to change on that story? >> much against the views of many who were convinced the euro was going to crash, i think it's clear that a change of strategy, it's clear the greek government so far has been able to hold together and is at least deliver a program of fiscal targets that

the troika is prepared to accept. but we know with the debt levels that they've already got -- >> at some point, we need large debt forgiveness program. >> i think a debt forgive ps program for the official critters is going to happen. but not this year, not before the german election and probably well into 2014. so this process will continue to talk about everything is fine and dandy until we get to 20140. >> by the way, we've coined that phrased. >> which one? >> the one that i can't say. >> put money in the jar or something? >> no more any of that. >> bad news for us should we sell alcoa on this development. coming up, find out why political bickering in washington could leave america with a larger debt burden than italy or greece. >> we'll talk about that in just a moment. ♪ [ male announcer ] how do you make 70,000 trades a second... ♪

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welcome back to the program. >> samsung will forecast an operating record profit in the fourth quarter. >> and aig considers legal action against the u.s. over its massive government bailout. yes, talk about that.

aig's board is meeting reportedly tomorrow to consider whether to sue the u.s. government over its $182 billion bailout which it just finished paying off. the "new york times" suggests the aig may join a $25 billion suit filed by former ceo hank greenberg. the suit argues the nature of the bailout with the u.s. taking a 92% stake and made whole aig's wall street clients deprived shareholders billions of dollars. ahh, if you're a shareholder, you're most at risk when the company goes bust. isn't that the point of capitalism? you get wiped out. >> i find this extraordinary. i was just in the u.s. and aig is running ad campaigns touting, saying thank you so the american people and now this news. as i said, present more in just a couple of minutes of time. as the debt ceiling issue plays out in washington, new research suggests the u.s. government could run out of resource toes meet all of its

financial obligations as early as february 15th. we know we've hit the debt ceiling, but we're going to run out of time to stresh that. mid february. what's your take on all this? >> i haven't followed closely what maneuvers timothy geithner can use to extend the debt ceiling by the way the u.s. government can extend it in the past is simply not pay its bills. so any sort of cash reserves you'll have to replenish later. whether february 15th is the absolute deadline and whether the treasury department can squeeze it further i think it can probably get to the end of the month of february. >> what's the real significance of this event for the global economy? >> well, the worst scenario, of course, would be that everything koms comes grind to go a halt, the u.s. government acan't pay its bills because congress cannot agree on a deal and all this process takes place as it was in the battle between

clinton and the republican congress way back. we're not going to get that scenario. for one big reason, we have a sequestration policy in place. and, therefore, the debt ceiling can probably, on that basis if nothing is congress, congress will agree to raise debt ceiling on the sequestration. but that is a messy solution. what we need is an agreement between congress and the president over the long-term, both on what spending measures have to be taken for 2013 and longer term. and that is the debate that is still under way. i think there will be some sort ooh a deal. we were halfway down from the previous agreement reached on september 11th. it's a process that's going to be tortuous, but it will probably be resolved. >> tortuous and messy i think will the right words. >> why don't we turn our ears now until like this 24th hour and then just tune -- i mean, forget anything to that point is going to be noise, right? >> well, unless the noise tells

you it's going to happen which is it's going to be -- >> well, that's my point. we all know it's going to be messy, complicated, tortuous. >> clearly, it will be fiscal issues in the u.s. economy. unless there's growth in the private sector to more than compensate for that, u.s. growth is not going to be as fast as necessary to hope the rest of the world. >> stay with us. straight ahead on the program, samsung sets its sights on a bigger home of clients' markets. >> we'll bring you the latest as we preview the consumer electronics show in las vegas. , we can afford to take an extra trip this year. first boston... then san francisco. hotwire checks the competitions' rates every day so they can guarantee their low prices. so our hotels were half price. ♪ h-o-t-w-i-r-e... ♪ hotwire.com

quick correction on those spanish fund-raising targets this year. reuters is saying the growth issuance figure is 121 billion. i think we had cited it was in the 90s. treasury is also saying it will cease issuing 18-month treasury bills from february to issue nine-month bills instead. we've got the latest results out from greece' t-bill auction. they went out at a yield of

3.95%, extraordinary. it was down from 3.99% last month. bid to cover ratio, just about 1.3% and it sold about $945 million total. now, for the 1.6 billion that it did sell in 26-week t-bills, the yield there was 4.3%. that was down about eight basis points. samsung is forecasting another record operating profit in the fourth quarter, but investors weren't especially impressed. chery has more of the details from seoul. is this something we've seen before, buy on the rumor, sell on the fact? >> that is the track record, ross. for the past 12 quarters, three years, that is, the stock has underperformed the index up for five straight sessions after each guidance. now, for the earnings guidance for the fourth quarter of 2012, now smartphone sales, of course,

of the galaxy x3 is believed to be the main driver of these strong numbers. fourth quarter sales came in at 56 trillion and 1 and operating profit at 8.8 trillion up 8% on year. so this is actually the fifth record quarterly operating profit. but there are concerns that its earnings structure is too dependent on its mobile division. that accounts for some 70% of its annual earnings. now, it looks like it's trying to break away from that, actually. the company's consumer electronics president said today at the consumer electronics show over in las vegas this week that the firm is on track to be the tom home appliancemaker by 2015. at the show, samsung electronics showed off its internet connected french televisions that are smart enough to recognize people's gesture. guys, back to you. >> chery, thanks very much for

that. samsung's move comes as the world's biggest showroom for gadgets and gizmos gets under way in las vegas. qualcomm's ceo gave the key note address last night. the theme for this year's ces could be bigger is better given the focus on the devices that are larger, stronger and faster. joining us now from sympathy city, mark hauser. good morning. i'm impressed you got up for us because i'm sure it was a fun filled evening last night. what's your take from day one? well, i think the bigger is better theme is definitely rampant at this show. what we're seeing is that we've heard of tablet pcs before, but we're seeing from a lot of manufacturers table pcs, which means that you're having a larger than life screen, but it's sort of refreshing in the

sense that a lot of firms, like lenovo and others are targeting the family room because families can gather together. many of us go on the couch and go off with our own devices. what they're trying to do is get families togetto p games in this case with windows 8 in this case, but they're own operating system like air hockey and you can play card games with your family and friends. it's a clever way to innovate. >> mark, is there anything to real in the fact that it was qualcomm and not microsoft giving that key note address last night? >> yeah. i think so. i think ces is trying to position itself in a world that is going mobile. microsoft has been known for a long time for the pc, and the technology world is changing. a couple new chips have been introduced for smartphones and coming to tablets, too. in barcelona, there will be a lot of focus on the smartphones.

think about google and android and a lot of those manufacturers. so i think that they're trying to steal a little thunder away from mobile. >> trying to get into the internet tv space and they needed to concentrate on mobile, what chance have they got cracking that? >> well, it's been a year since intel introduced its latest chip for phones. today, they talked about a dual core processor that's coming to hand sets. i can tell you that later this week we're going to hear about at least one high profile manufacturer jumping on board. but when you think about what nvidia is doing at the show with the processor that's inside not only their own phones, but their own gaming console for android, they have a tough hill to climb. >> mark, "webtop magazine," are

you going to have to big a broader phrase, do you think? >> a while ago, we changed our tag line to the pulse of mobile tech. what that means, for us, whether it's a tablet or a notebook and you think about all of these hybrid devices, you can actually remove the screen and transform from laptop to tab receipt, in a way, we're evolving with the economy. >> thank you very much for getting up and joining us. and we'll take a short break. still to come, as bankers around the world adjust to a new mobile, we take a look at what's in store for you.

welcome to "worldwide exchange." i'm kelly evans. >> and i'm ross westgate. these are your headlines today around the world. >> heavy metal profits, the first major u.s. company out of the gate with earnings season, but results may continue to be pressured by weak aluminum demand. >> samsung operate a fifth straight operating profit in the fourth quarter. >> greece's prime minister lands in berlin, telling germany's chancellor that his budget is delivering on budget targets. this as angela merkel gears up for a key regional election. aig just finished paying off its big bailout, and the company

is now weighing whether to join a lawsuit against the u.s. government because of the rescue. if you're just joining us stateside, a warm welcome to your day. kelly and i are back together, and we're making the most of that for at least two days. the greek prime minister anthony samaras and angela merkel are ready to give a statement. this is where they're going be doing it. we'll dip into that and hear the first comment when that happens. but first, kelly -- >> yes.p;mó&pu1tuuuuuuuuuuuuue[ let's give people a sense of where markets are trading. it's calm, quiet out there. the dow jones industrial average is down some 12 points. after a roaring start to the

year, to some extent on the earnings which we'll start to hear from later in the day from alcoa. in the meantime, the ftse cnbc 300 is sitting flat. looking at the european bourses, same story. the dax is now underperforming having led the charge in 2012. down about 10% today. the major parts are trying to eek out some gains. 10% for the ftse 100. the iex 35 which is just after spain issuing its net funding costs for the year, ross, is adding about .1% there trying to raise in net about 71 is billion euros. >> yeah. meanwhile, as wall street firms begin to deliver annual bonuses, some bankers are bracing a smaller payout. goldman sachs has paid out $65 million worth of bonuses on december 30th, preempting the rise of the tax rate that came

with the fiscal cliff negotiations. we'll find out how much other banks paid out when they release their results which start with wells fargo on friday. >> meanwhile, city of london is continue to go shrink. the number of city workers in the uk capital has fallen to an eight-year low. analysis of the financial services authorities database show people employed by front line jobs has fallen since the financial crisis hit in 2007. the number of staff working in the financial services industry sits just under 152,000 jobs. on that note, joining us now for more is alexander viedoff. alex abdomen ra, welcome. >> hi. >> what we're looking at is bonus season. it comes at a time when jobs are under pressure. that's contributing to the changing nature of bonuses. what should city workers expect this year? >> i think it's going to be a difficult year again.

this year, there's even more pressure from regulators, investors and from the wider world. the media is very posed on this. >> we know for a lot of u.s.-based banks, they're bothly going to have the worst bonus season since 2008 or 2009. the nature of bonuses are changing, too. it's not necessarily big checks people are handed at the nd of the year. it's more deferred comp. >> about two years ago, new rules came in. which meant a huge portion of bonuses had to be deferred. if you were get ago million pound bonus, after the rules came in, you could only take a home a few hundred thousand and the rest of it would be deferred for a period. now what we're seeing is huge pressure from regulators that that deferred piece is not secured and can be clawed back. that's one worry for the n%

deceived. >> and we have angela merkel and the greek prime minister start ago press conference. if i was being paid a bonus and i knew some of it would be clawed back, i would prefer the banks to keep that back for themselves rather than me have it. i'm thinking -- i don't know. maybe i wouldn't trust myself not to dare spend it because all i could do is stick it in a bank account. it's hard to receive something on the note that you might give it back. >> standard practice, the bank keeps it and you don't get it for three years. there is another practice where you get it and two years later they could come out here. >> which is a lot laugheder and it's not as common. >> okay. >> i think the other point about this season is in europe, the banks have escaped significant will the and the parliament had pushed for this.

actually, that's delayed until next year. that would have seen bonuses capped at one time salary, whereas the bonuses -- >> you know, real quick, what the average is? >> it can go up to nine times salary. >> wow. >> any comment there, bob? >> i think the best thing to do is actually -- which i think is when you brought in that bonus tax, right? pay out any bonus you like and tax it at any level you would like. >> it's another mess in the tax system where you've got a range of different exemptions and changes. we try to simplify tax. that's one reason why you probably wouldn't want to go for it. nine times bonus would be interesting. i would not be so pleased to receive that. there's been a move, i think, to pay bonus necessary kind is for the sense of where bonuses can be paid in the junk bonds that

were toxic before and maybe they'll be revived and you get your money back that way. >> yeah. there was something that's they've been considering for a while, that shares aren't necessarily the best incentive. that might be an alternative. and certainly the europeans have been looking at this parliament and have been considering. next year, we'll see more of that. this year, we're waiting for rules. maybe next year it will be something. >> yeah. maybe next year. it's interesting because as you said, with some of these regulations, we were having a discussion earlier in the show about how difficult it is to enforce the kind of regulation we want to see for state banking or other industries longer term when the economies are still weak or they're under pressure or what have you. and there's always a sense of, well, once they're stronger, we'll do this. are we ever going to get that po point? >> there are people in the european parliament who want very, very strict rules. there are specific districts

that will be hit hard by this, such as the uk. and the uk is concerned that we have this banking industry and bankers will want to move that into the schedule. there's been a lot of debate going on in europe. i think at least for this bonus season that we're about to see, daily scanes. >> thank you so much. just remember what you're watching here is anthony samaras, the greek, he's currently giving a press conference with the german chancellor angela merkel. one of the big tail risks last year was greece being ejected and germany decided it was better to continue writing the check. >> one of our viewers, ray, makes a good point. we're keeping an eye on it and it's not as if markets are moving on every pregnant in this meeting itself is telling. >> right. >> it will be tweets between the two until after next september.

>> that is after the election. >> yes. coming up, aig after paying back its loan is deciding whether or not to sue uncle sam. ck.ll tell you more when we ♪ [ male announcer ] how do you make 70,000 trades a second... ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it.

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welcome back to the program. maybe samsung didn't need any execution toes explain its solid earnings forecast. but several u.s. companies are expected to pick up a few scape goats when they turn in profits this month. superstorm sandy and the fiscal cliff are expected to top the list. check in ennings season after the closing bell today. and there may not be a lot of love to go around in waudz this valentine's day if lawmakers fail to get together on debt talks. the debt ceiling could be hit by mid february, or at least the point in which the u.s. can no longer pay its bills. our own chief washington correspondent john harwood has full analysis over at cnbc.com. so a couple of stories that you won't want to miss over there. and if you're just joining us today, here are your headlines. ross? >> yep. the -- thanks for that. eurozone unemployment rate hitting a fresh record high of 11.8% in november. as more than 11 00,000 people

lost their jobs. they jump into the youth jobless rate, which soared to 24.4%, up from 24.2% in october, the highest level on record. take a look at euro/dollar. it's a bit of a dip when we got that news out. but they're suggesting that there may be a lull in effectively the market's view of the eurozone crisis. but it hasn't done anything to improve the underlying data. those retail sales numbers, by the way, on the year were down over 2% in november, as well. down 2.6% on the year and we've got record youth unemployment rate in italy, as well. >> and, again, these are your headlines if you're just tuning in. earnings season kicks off in the u.s. as alcoa reports after the bell today. the global smartphone war heats up as samsung forecasts a record operating profit in the fourth quarter and aig reportedly considers legal action against the u.s. after its massive got bailout.

and so aig has brought this meeting tomorrow to consider whether to sue the government $182 million bailout. the suit doesn't argue that the bailout wasn't necessary, but it argues about the nature of the bailout. the united states government made whole wall street's clients. they claim it violates the fifth amendment. well, i am not sure about the fifth amendment, whether we've -- but as a principal, bob, when the shareholders take the risk -- >> they take the hit if things go wrong. and a company goes into loss or is at the point of bankruptcy, the shareholders are the first people to take the hit. i suppose an issue that might be

at debate here is what price the taxpayers paid for taking over the company compared to what its value was. one question. and the second question is, was it necessary for u.s. taxpayers to bail out in whole all the critters of aig? some of the big investment banks who had counter party relationships with aig. or the issue of whether aig shareholders, the past ones, not the same ones now, should be compensated for what happened? i suppose the court can decide. >> it's a bit strange thing. aig said thank you so the american taxpayer. >> i was mentioning that i've been in the u.s. they're running these ad campaigns which say they've used a series of aig workers and say thank you so much, america, for helping us get back to this position. we couldn't have done it without you. now they turn around. it's the former ceo hank greenberg. but it turns around and just from a pr point of view, the

different signals, the dissonance is extraordinary. >> it is separate from the company so far. if there's going to be an alliance between the two, now it's into the existeding board accepts the view that greenberg, that aig was basically screwed by what happened with the taxpayer. but this will be a long one. we won't see any results on this paper this year. >> yeah. absolutely. but to claim right at the time when they're trying to alter talk by how much they benefited. for more on that story, head to our website, cnbc.com. >> it's getting a lot of read. don't miss out. turning our attention to yum brands, it fell more than expected in the fourth quarter. pizza hut and kfc cite bad

publicity from the government based on its chicken supply. the company found its full year earnings forecast below analyst estimates. now, espionage and intrigue on the high sees. oracle america's cup team is guilty of spying on italy's lun na rossa team. spying is apparently routine until the america's cup, but the panel concluded oracle came within 200 meters on the rossa cat amaran and that is against the rules. it's the latest setback for the team whose main boat cap sized and broke apart in october. the america's cup will be in san francisco this fall. what do we think, west of san francisco to follow the results? play up the corporate angle? >> it works for me. we are going to try and bring it back. >> there is a cnbc team.

>> they're going to have a go. not cnbc, no, ben angley. >> ben is not on the cnbc team? >> yeah, we haven't basically, i think, since it was 1877 had a -- britain hasn't had the cup. now, it was a sea in greater miami last night. this is the alabama/crimson tide. it beat notre dame, 42-14. that was a slaughter, kelly, and the bcs championship game. a crowd of more than 80,000 watched it t sunlight stadium. alabama won back to back college football titles. three of the past four. it now has nine in school history. >> now, the fact that notre dame made that it far was historic in the first place. a good effort there. >> they were two closely ranked teams. >> yes. notre dame has extra additionally had a strong football program & and that institution was a great story to begin with. they couldn't pull it off.

>> goliath won in the end. >> and not david. okay. right. just in case it wasn't clear, notre dame is a catholic school. we're counting down earnings season and we'll tell you what to look out for when we come back. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.

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textile production in spain, and the use of medical technology in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. welcome back. alcoa is expected to earn 6 cents a share and revenues of about $5.6 billion. as in past quarters, the slulgish global know, the eu debt crisis has held down demand, although both the whisper number point to a beat this afternoon. last month, moody's warned it may cut alcoa to junk status on

aloom nut pricing the. >> yep. meanwhile, u.s. features ahead of the earnings later today is where we stand. we're currently about eight there you go. the nasdaq is currently 2.5 points below fair value. so we are flat, very small, negative. joining us for more, jeff, thanks for joining us. earnings kicking off. what does it mean for you? >> well, the earnings estimates have been coming down for motor of the forty quarter. the other week, i think about a week and a half, they started getting raised again. i look for earnings to be up about 3.1% when the firourth quarter of 2012 is finally in the record books.

>> yeah. so look, as we go through this earnings season, we have volatility down at fresh lows as measured by the vix, as well. are we happy with that? are we too complacent about risks or are we going to meander our way through here? >> well, there's been nine sessions in the past, i'd say, 15 years or so where the vix has collapsed. five or six straight day necessary a row by over 40%. and the track record of the equity markets and their performance in the weeks following that is not very good. they have been up three out of those nine times. so the back to back 90% upside volume days we got at the start of the year indicate that a month to three months out, the equity markets over here in the states ought to do pretty well. but in the short-term, i think we're a bit extended and i think we're going to try to pause or pullback a little bit. >> do you think the second half of the fiscal deal debate in congress is dampening equities or is the equity markets going to shrug this off?

>> well, i clung to the naive belief having lived inside the beltway that when things had to absolutely positive, that they typically happened. so it was not a surprised to me to ee an nth hour rescue inside the d.c. beltway. and i would say the same thing about the upcoming fiscal cliff. it's politics as usual until you approach the fiscal cliff and it looks like the government is going to shut down. and then i think the boys and girls will actually come together and work a solution. >> does that mean we should turn our ears to anything until literally the 24th hour? >> ignore all the buzz up before it? yeah. >> that's the way washington works. if you recall last year, they waited until last minute to extend the payroll taxes as well as last minute to extend the bush tax cuts. that would have been 2011. excuse me. >> i like that. that's what i was suggesting earlier, jeff.

good. i might have to taught about it. why do i have to listen to it? jeff, great to see you. have a great day. >> and bob, what's your closing thought? >> my closing thought is keep focus on italy for this quarter. they have a big election coming up there and how that unfolds is going to have an impact on the euro crisis, the focus for the euro crisis, which is not over in my opinion yet is going to be on italy. not owe on the other countries it's had so far. i think we're going to see some recovery on the manufacturing globally. >> that's a good point. we didn't get into that. but "squawk box" is up next. from kelly and i -- >> we'll both see you back here tomorrow. with the spark cash card from capital one, sven gets great rewards for his small business! how does this thing work? oh, i like it! [ garth ] sven's small business earns 2% cash back on every purchase, every day! woo-hoo!!! so that's ten security gators, right?

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